deal architect

Burning Platform: Workday’s Rapidly Expanding Ecosystem

For the 119th episode of Burning Platform, we host Matt Brandt, Senior Vice President, Global Partners at Workday. He is a very articulate West Point graduate with a long tenure in various roles at Workday.

I wrote recently about Workday’s Innovation Summit and how they are spreading their wings in multiple directions. Not surprisingly, Matt presented there an expansive view of how Workday’s ecosystem is evolving and I invited him to elaborate below.

“If you look at Workday, a roughly $7.5 billion dollar revenue company, we have had a relatively small services partner ecosystem (about 50 firms globally). We've always been known for prioritizing the quality of our service relationships over the quantity of our relationships.”

That is rapidly changing.

“As Workday transitions from an application company to a platform company, the needs of our partner ecosystem changes. And so that's what my organization is charged with - transitioning how the partner ecosystem will support the company as it transforms into a platform company.”

“We have operations in every theater globally and we operate in just about every industry globally. Instead of piece mealing this market by market and partner by partner, we've taken a really simple approach…if we focus on 3 things - building, growing and delivering, then long term we will have great outcomes for our partners, and for our customers. And then ultimately, for Workday. That’s how we've chosen to communicate with our partners, and align the investments that we're both making in our respective businesses”

He drills into examples of innovations from partners like Huron, Accenture and KPMG specific to the healthcare vertical. I particularly liked his description of Kainos, a partner in Ireland (but widely represented across the EU) which works on multiple dimensions with Workday. They have built new applications on the Extend platform and “they have influenced hundreds of sales opportunities and they're one of our best deployment partners”

When asked about new vectors, he cites Insperity, a Texas based PEO (professional employer organization). And ‘there are more opportunities like that, than we have time for. I'm not sure what the future will look like. But I think whatever it looks like it's going to be pretty exciting.”

We will just have to bring him back every few months to describe new frontiers he keeps exploring, In the meantime, enjoy this fast-paced State of the Ecosystem conversation.

Burning Platform: Not your grandpa's Services economy

In the 48th episode of the series we have Peter Bendor-Samuel of Everest Group, a research firm focused on IT, business process, and engineering services since it was founded in 1991.

I enjoy catching up with Peter on a regular basis to get his perspective on trends in outsourcing and the broader IT, BPO, strategy services market.

He says the market is broadly strong - "rising tide raises all boats" - with the confluence of digital transformations, modernization projects/ related legacy outsourcing and pent up demand from projects slowed down or postponed in 2020.

What's different is the influence of hyperscalers like Google and Amazon and strategy firms like McKinsey, BCG and Bain. We also discuss the trend of "servitization" - where industrial and other sectors are generating more service revenues around their products and moving to "as a service" models with subscription revenues and outcome based models.

BTW, on the last point about servitization, I have been researching that trend in detail over the last few months. You will hear more from me on that in the next few weeks. In the meantime, enjoy this conversation.  

We cover wide ground, as is common with my conversations with Peter. I always learn something new from him.

Analyst Cam: Tercera

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission ), as part of my Analyst Cam series. 

This time, it is Chris Barbin, presenting on his new fund and advisory firm, Tercera. Chris was one of the co-founders of Appirio, a pioneering cloud systems integrator. They built practices around Salesforce, Google, Workday and others starting in 2006. A decade later they were acquired by Wipro, the large global outsourcer.

His focus now is SIs who are building practices around what they call the "third wave of the cloud" - ISVs like Okta, Snowflake, Splunk, Slack and others while also those focused on new  markets for Salesforce, Workday etc. He has also put together a nice board of advisers to help these firms navigate the changing cloud landscape.

Many investors still avoid professional services startups and that becomes Chris's opportunity.  It is an invigorating conversation with one of the savviest services executives I have known.

In fact, 12 years ago he was profiled in this blog as a "cloud pioneer". He continues to be one.

 

Workday Services Ecosystem - Part 2

This continues my conversation with Workday’s Emily McEvilly and Webb Armentrout on Workday’s SI partner ecosystem.

Post implementation services

In the heyday of legacy software, post-implementation upgrades, hosting, application management turned out to be a fairly sizable long-tail expense for customers. The quality also turned out to be pretty poor because customers would sign up for years and the integrators would just have young staff supporting them, quite often offshore. So I asked the Workday team, how they monitor AMS around their products?

“We think of customers on a broad spectrum of self-sufficiency,” said McEvilly. “Some really want to be self-sufficient, drive innovation and manage all the systems of their own. Others might just need ad hoc support if they have turnover or maybe they're going to run the system,” she said. “At the other end of the spectrum, we have organizations that love to outsource everything. We have customers across the spectrum, in all sizes and we’ve designed our ecosystem to support those different components.”

Workday as a whole seems to be taking a much more active role in optimization services, borrowing a page from Salesforce’s playbook. At Workday Rising in Orlando the company announced the general availability of Success Plans, which offer a mix of education, tools, and services. As McEvilly puts it, “It's a way for Workday to play a more active role in helping customers adopt the features and functions that they already own and that we'd like them to turn on to drive additional value. That's our approach and how we think about AMS type services.”

A growing footprint, vertically and globally

 With Workday gaining traction in vertical markets and the company’s global customer base growing nicely Workday’s partner ecosystem has evolved to keep pace. The growth in verticals is as McEvilly puts it, “bread and butter” for the partners. “Because of the way they go to market, partners have an opportunity to differentiate themselves with their IP and thought leadership.” This has helped drive innovation and growth for partners who are able to marry industry specific expertise and IP. McEvilly continued, “We are seeing are partners that have strong vertical practices gravitating towards Workday. In many cases, they’re able to create templates whereby they can demonstrate unique vertical capabilities and then take that to market. In many ways, our partners are helping to lead the way, especially as we continue to push and grow in financials. Financials, at its core is a vertical play.”

Another interesting area for growth and differentiation for partners in the ecosystem can be found with Workday Prism Analytics and with the upcoming general availability of Workday Cloud Platform (WCP.) Armentrout weighed in, “as we continue this vertical ramp up, this becomes the best of both worlds. You've got the methodology that we require of our partners, the framework around the deployment that helps drive that 97% customer satisfaction. Layered on top of that, Workday Prism Analytics and the ability to create templates specifically focused on industry and then the Workday Cloud Platform, it allows the best of both worlds.”

According to McEvilly, partners are already tapping into Workday Prism Analytics to differentiate themselves and provide very specific vertical offerings. “In healthcare, we're offering up some analytics around connecting cost of procedures to doctors and salaries, so you can see profitability. Partners that are really deep in that vertical are thinking of new ways to bring in third-party data via Workday Prism and combine it with data across Workday HCM and financials to show new insights to their customers.”

The last area the Workday team highlighted as a growth driver for verticals which was discussed at the Rising partner panel in Orlando, is software partners. Workday’s SI partners are becoming more adept at connecting with the company’s software partners to provide end-to-end solutions. “We talked about a solution that Accenture built with GoTransverse, which is a billing solution, to solve a very unique industry need,” said McEvilly. “I think, across those three avenues, WCP, Prism and software partners, there is a lot  of opportunity for us to drive more business together in the verticals.”

The changing landscape of the SI world

The SI market has seen its share of consolidation over the past few years. One of the things that both Salesforce and Workday had quite a bit of, at least in the beginning, were a lot of smaller, regional firms like the Appirios of the world. Recent times have seen larger SIs gobble up boutique players. This presents a challenge to vendors like Workday, not being able to offer their customer prospects much choice when it comes to an implementation partner.

So, I asked Workday how they balance the partner mix. According to Armentrout, over the past two years Workday has on-boarded seven new partners. “We're very aware of the need to provide a full offering of different partner types including boutiques like Invisors,” he said. “We recently brought in AVAAP as a boutique in the healthcare market and Guidehouse, which was a spinoff from PwC in the state and local government marketplace.” Workday also has boutique partners like BNB in Iberia and Data Dimensions in South Africa. 

Armentrout acknowledged that the acquisitions make a big splash when a company like Accenture acquires DayNine or Wipro acquires Appirio (which has since moved over to Alight.) But, as he says, “While that makes a lot of noise, we are behind the scenes continuing to seed and grow the market."

Many SIs tend to be stronger in white collar functions, not operational ones.  As Workday gets deeper into verticals and starts to get into operational books of record, I  will be interested to see how the ecosystem evolves.

Workday Services Ecosystem - a conversation in 2 parts

I recently sat down with Workday’s newly minted Chief Customer Officer, Emily McEvilly and Webb Armentrout, VP of Global Services Alliances for an in-depth conversation on Workday’s services ecosystem. At the core of the Workday approach are an instrumentation rigor and a commitment to delivering 95% (or higher) customer satisfaction.

I recently wrote my decade-end perspective on the outsourcing market including my observation that it continues to be labor intensive (which reflects in staff turnover, inconsistent project quality, and high travel expenses) and that there has not been enough of a focus on continuous improvement and automation.

So it is with this lens, as former SI and current industry watcher, that I dove into my discussion with Workday. I also had a chance to attend a panel with three Workday partners, in addition to Workday executives, at the Rising event in Orlando this fall. The panel provided a good primer on the ecosystem with 35+ deployment partners.

My conversation with the Workday team covered a lot of ground, so I have sliced the blog into two parts. Part 1 today covers Workday certification of partners and automation both delivered by Workday and its partners. Part 2 will cover post-implementation services, how partners are helping grow the functional footprint, and how Workday keeps recruiting new partners.

Workday has invested heavily in the training and certification of partner staff and keeping those refreshed. This goes hand in hand with the company’s investment in the project quality assurance process, which Workday calls Delivery Assurance. Both aspects of this diligence are near and dear to McEvilly, who was previously senior vice president of services at Workday, responsible for ensuring operational excellence of the company’s services team.

“We want our customers—no matter where they are in the world and who manages their deployment—to have a common Workday experience,” said McEvilly “In order to accomplish this, Workday has developed a very rigorous process of initial certification, much more rigorous than in the legacy system days. There are different tracks, whether you're an HCM consultant or a financial consultant, and there are advanced tracks for additional SKUs that Workday offers.” According to McEvilly, this is not a one and done certification. After completing a training program, partners are then tested. This process repeats after Workday pushes a new feature release (every six months) with an additional set of required training and tests that go out to the partner ecosystem.

Partners have a specific timeline in which to complete their training and the testing, which Workday monitors closely. “We track the status of every (nearly 11,000) consultant in the ecosystem, and their status across the certification process. We also track how they're assigned to our customers, so we know exactly which consultants are on which customer project at any given time,” said McEvilly.

Workday captures a fair amount of detail across their partner ecosystem. Per McEvilly, Workday has dashboards that show, by firm, the tenure of their employees, the average number of certifications, coupled with the results from the delivery assurance process. “This allows us to see trends and quality on every single Workday deployment, both primed by Workday or by partner,” she said.

“Delivery Assurance drills down to a very granular view across project management, the functional workstreams whether that's payroll, HCM, or finance, and then the technical component around integrations.” From there, each Workday deployment progresses through various checkpoints and is subsequently scored red, yellow, or green. This rating system allows Workday to proactively flag any potential risks and make recommendations to the partner and the customer for how best to optimize their configurations. With all this data, Workday is better able to align resources and training to help partners and customers succeed. “Having this kind of insight allows us to engage in really candid and productive conversations with our partners,” said McEvilly. “We can approach a partner and say we see that you've had some quality issues with your deployments over the past six months. How can we help? Do you need additional training? Can we look at your methodology? Then we'll meet with them and review best practices.The end goal is to have these conversations and make corrections before a major issue arises for the customer.”

I had to ask Workday, how do your partners react to this much feedback? “As you might imagine, we sometimes have challenging conversations. But, ultimately, because we've got the data on certification, and delivery assurance, it's a fact-based discussion that lends itself to a much more productive conversation. Workday's 95% customer satisfaction is everybody's true north,” said Armentrout. The feedback is not one directional, “We ask our partners to provide us feedback as well, and often get very valuable insights on our programs, process and the products,” said McEvilly.

Tooling & Automation

SAP has invested quite a bit in updating its automation as customers move to S/4HANA. Plex has piloted a machine learning project where they looked at the systems configurations that customers set up. Clearly, that can be used down the line to automate that step in the field. I asked the Workday team about their automation and those at partners.

“Workday has invested in the quality of the preconfigured content that is the backbone to our implementations.”  said McEvilly. “Workday Services has collaborated with customers and services partners to create and optimize best practices for implementing Workday, including variables such as company size, countries of operation, and industry, and artifacts such as reports, dashboards, and integrations.”

According to Workday’s tally, approximately 1,000 customers (as of 2019) used the company’s existing tooling to access preconfigured content for use in their tenants. “We are committed to ongoing enhancements to the tooling,” said McEvilly. Workday has pre-configurations around functional components as well as libraries of dashboards and analytics, and according to McEvilly, “will continue to invest as this will enable even more customers and implementation partners to easily what they need to accelerate their initial implementations, and their adoption of new features.”

Workday isn’t alone in investing time and energy in automation and tooling innovations. According to Workday some of the company’s smaller partners are on the cutting edge of automations particularly around medium enterprise. “We have a partner called TopBloc that created a file that takes the ADP Quitter file and automatically creates a Workday tenant from that. OneSource Virtual also has created a lot of innovation around the payroll process and reconciliation,” said McEvilly. “We’re seeing innovation come in different forms. It could be a parallel testing tool that reduces the risk for those large deployments or conversion tools to move large customers over from PeopleSoft,” she continued. “A lot of partners are innovating in the way they partner with tap into our software vendors so they can provide a more complete solution. It really runs the gamut.”

“Our focus drives toward a common methodology,” said Armentrout. “So, partners differentiate themselves through innovation. As the Workday Cloud Platform continues to mature, we will see even further innovation going forward.”

Deja Vu all over again

I was in India last week and visited with a couple of outsourcing firms. In my travels, I got reminders of several due diligence visits I had helped clients with from 2003 to 2010. The Renaissance in Powai reminded me I had stayed there with a client during a visit to TCS. A Cognizant executive reminded me of visit with another client to Chennai. A drive-by the Hinjewadi building of Persistent reminded me of a visit with yet another client.

A bit of deja vu, all over again.

My firm, Deal Architect has helped a number of clients evaluate SIs, negotiate hosting and AMS contracts. Before that I had a marketplace startup which helped customers develop digital services RFPs and evaluate responses. Prior to that at Gartner, I helped a number of clients with their ERP SI evaluations. India and E. Europe have actually been a small part of the landscape across which we have helped clients with services procurements for a couple of decades.

The time is right to help clients with their new wave of services procurements - as they move to S/4HANA, as they evaluate cloud infrastructures, as they look for post implementation support around their cloud apps.

It's a new world - not sure vendors have evolved enough in skills, methods or automation.

Clients need a deja vu to avoid some of the mistakes we all made in the last wave. Look forward to helping several of them.

A Change at Cognizant

I got this nice note from Francisco D'Souza, CEO at Cognizant this morning

"I hope this note finds you well. I wanted you to be one of the very first people with whom I share important news.  After 25 years at Cognizant, including 12 years as CEO, I’ll be stepping down in April. 

It’s been the privilege of my life to have had the opportunity to help build and grow Cognizant since its founding 25 years ago—a span that represents half my life. Yet, after much discussion with my family, I informed our Board of Directors last year of my desire to step down as CEO sometime in 2019. Today we announced that I will do so on April 1, after which I will remain on the Board as Cognizant’s Vice Chairman.

The Board has named Brian Humphries, who is the CEO of Vodafone Business, as my successor.  He's the right leader to take Cognizant forward, and I am excited to welcome him aboard.

I have never been more optimistic about the future of our company. Cognizant has a market-tested strategy for growth that is deeply aligned with our capabilities and our clients’ needs. The best days lie ahead for Cognizant, and I look forward to continuing to play a key role in the company’s many future successes as Vice Chairman of the Board.

I am truly grateful for your friendship and partnership over the years and extend my best wishes."

Thank you, Frank. It has been my privilege to profile you as a global polymath in my books and posts. You are still very young and I look forward to continuing to watch you as you guide our industry in different ways.

In the meantime, I look forward to hearing more from Brian who brings his own impressive global background from Vodafone, Dell, HP and other tech vendors. 

DefCon 2: Cloud and Digital Service Providers

Wipro is acquiring Appirio. Congratulations to my friends at Appirio which I have profiled in many of my blog posts and books as a cloud pioneer.

But the move needs to come with a warning.

The Appirio deal is the latest of cloud acquisitions by large, legacy outsourcers including as Phil Fersht says

“Accenture's acquisition of DayNine last month, IBM picking up Meteorix and KPMG's acquisition of Towers Watson's Workday practice in the Workday services ecosphere, and Accenture/Cloud Sherpas, IBM/Bluewolf and Capgemini/Oinio in the Salesforce market. “

Here’s the concern. Most of the large outsourcers depend heavily on ‘post-live” services that came with on-premise systems – application management, systems management, hosting, BPO, upgrades. In cloud world, many of those services are provided by the “as-a-service” vendor. The Appirios of the world focused on implementations and crowdsourcing of resources. Will the larger outsourcers buy into these principles or will they try to sell those large post-live staff even around cloud systems?

In my recent book on automation, I profiled man and machine transforming work in over 50 industry settings. Surprisingly, little automation is happening in the outsourcing world

“Wipro is using machine learning algorithms to help with its internal help desk support. The firm has now created an AI platform called HOLMES that uses computer algorithms to reduce human effort in many of its customers’ industries. Tata Consultancy Services is working on an AI platform called ignio to help build applications quickly and get more out of its infrastructure management capability. Infosys has announced a major investment in automation capabilities as well.

However, given how labor-intensive these firms are, such automation efforts will only have a tiny impact. A few good operations research experts could easily reduce the insane amount of travel endured by their staff.”

When you look at automation in the Amazon, Microsoft, Google and other cloud data centers and compare that to relatively tiny investments the major outsourcers have made in their hosting infrastructure,  it provides more proof they want to continue their large labor based model.

Last year, in a post titled  Barbarians at the Cloud Gate I warned

“In the last year, as I built the model for SAP Nation, I have had conversations with several cloud vendors and shared my view that outsourcers/SIs from the on-premise world are looking for new parking places for their massive workforces and infrastructures. Cloud software vendors should leverage this bounty but be careful of the baggage many of those providers may bring along.”

That’s the reason for my increasing the warning level. Buyers need to press cloud vendors to restock their ecosystem with smaller, implementation focused SIs. They also need to push for more automation at the larger outsourcers.

Finally, these cloud acquisitions and references are being used by some of the outsourcers as proof of their “Digital Transformation” prowess. As I wrote recently in “Digital Rookies” it takes a lot more than cloud project experience.

In 1998, at Gartner, I saw the hype around ERP systems integration in the run up to Y2K and co-authored a fairly influential research paper which was titled “Application- Implementation Consultants — Overpriced, Overhyped, Overworked”

If I were at Gartner today, I would be starting to work on a similar report today about cloud and digital service providers.

Infor: an inflection point in the software market

Just before I had flown up to New York for the Infor Innovation Summit, I had interviewed Malcolm Frank, EVP of Strategy at Cognizant about trends he is seeing in the outsourcing and software markets. Malcolm talked about what he had heard from customers at Davos, the digital transformation and design thinking trends in the market, his firm’s network of “Collaboratories” (where they help conduct design workshops in innovative settings). 

So, I had to keep pinching myself at the Infor event I was not continuing my conversation with Malcolm. Hook and Loop, Infor's captive digital agency, presented example after example where they are helping customers rethink their changing markets and value propositions (like the farm example below - they used masked customer names).  Infor also walked us through their version of “Collaboratory” – their Garage (pictured above) where they help customers think new design.

There were several industry sessions like how Infor is helping retail/grocery customers like Whole Foods rethink merchandising, an area most have not touched in decades even as the sector has zoomed ahead. Another on changing commerce networks (broad ones to include financial institutions and logistics providers – the 80% of information which lives outside most ERP systems). Others on asset management in various public sector settings (like airports).

Over the course of the two days, there were plenty of other services related presentations and discussions – Value Engineering as legacy customers look for payback for moving to Infor’s  cloud solutions, Infor’s  automation of use of the Amazon cloud infrastructure with services like Lambda, DynamoDB and others, Infor Dynamic Science Labs with their data wizards, their own ERP implementation services and outsourcing partner ecosystem.

The natural question many analysts had was is Infor now a services company now? Yes and no. No because it has plenty of legacy customers from the many acquisitions it has made over the decades. No, because it is selling plenty of cloud software solutions (claims 58 million users and 8 petabytes in the cloud), and even with its heavy industry focus, took time to update us on their new financial modules (CEO Charles Phillips proudly called it the first new financial suite in the industry in a decade in a gentle poke that Workday is no longer the new kid on the block).

Yes, it is a services company because the industry is in transition. Cindy Jutras astutely observed in a q&a with Infor executives and later blogged about it

“In a way it felt like déjà vu all over again. These “custom” projects were reminiscent of the homegrown apps of the 70’s and 80’s. Nobody believed you could have pre-packaged apps back then. Companies believed themselves to be unique and therefore built their own applications.”

The big difference now is these days you can hire an outsourcer or build these new apps yourself. And you have another option - you can bring in Infor which will give you early mover advantage and the cost leverage as it spreads the functionality around your industry, and run it at scale and using the efficiencies of the Amazon infrastructure, and that of its other business network and its service partners.

During our conversation, Malcolm had commented how services and software companies have always looked at each other in envy. Software executives hate their quarter end flurry of contracts and envy the multi-year outsourcing contract model. Services executives envy the valuations IP based businesses get. Well, they don’t have to envy each other. Their markets are converging.

Yes, Toto, I've a feeling we're not in Kansas anymore.

NASSCOM: More Moore, less ABAP

My friend Phil Fersht was at the annual Nasscom event in Mumbai last week and wrote “More MBA, less ABAP is the recipe for India’s digital success”.

There is much to like in what he says, but I would go further

a) Much Less ABAP

My book SAP Nation shows a $ 200 billion a year ecosystem ready for disrupting, even collapsing. Part of it can come from Indian firms cannibalizing their own services in that market. Much more could come from Indian firms diversifying to SaaS vendors that SAP customers are migrating to and providing  third party maintenance to SAP customers. Unfortunately, many will just tell their customers to wait and see how SAP’s next-gen product, S4HANA matures.

b) Digital with Big D

As I wrote in this post, Digital Transformations require a wide portfolio of skills. “There are so many opportunities to digitize products, channels, shop floors, logistics, business models etc.  So many legacy systems need to upgraded and integrated to. The portfolio of skills needed to build a vibrant Digital Enterprise is very wide.”  Many Indian firms have some of these components in place, but many need to acquire digital agencies, product centric/R&D focused practices, and as Phil says maybe even some MBAs for digital strategy and business model transformation.

c) Refocus on Moore’s Law

This is probably the biggest change Indian firms need to make. They have to quit leading with labor intense models. A blend of symbiotic man-machine skills is key. Indian firms should have been leading the automation of knowledge work. They missed the last wave where Google, Amazon, Microsoft and others have shown the art of the possible. Plenty more to be done there. And even where the model is labor heavy they need to dust off their CMM and Six Sigma disciplines they religiously applied 10-15 years ago. As I wrote here, Moore’s Law is back in the enterprise, and to offset the wage and real estate inflation that plague India, Indian firms need to become even more acutely focused on continuous improvement.

d) Become geographically agile

When I interviewed Mike McNamara, CEO of Flextronics, the large contract manufacturer last year, I was struck by his comment that they moved a quarter of their physical plant across borders. Manufacturing has become agile – to take advantage of changing US energy economics, to be closer to emerging middle classes in Indonesia, Brazil or wherever and other trends.  If physical plant can be moved quickly even with all the logistical challenges,  there is no reason why labor pools cannot be similarly agile. Indian firms need to evolve the delivery model – doing the bulk of the work in India may not be the best way any more to service clients in the throes of complex digital transformations.